After seeing a gain of nearly 4 euro cents at the peak of Sterling’s gains following the Emergency Budget, we are now back on the brink of 1.20 again. The stronger than expected response to the questions over European bank liquidity last Thursday prompted the Euro gains. These gains against Sterling have been further developed as Sterling weakend off following a reduction in Services PMI – Purchasing Manager Index – data, data released this morning. This presents a good time for anyway looking to buy Sterling with Euros. There is a general thought that Sterling will make further inroads to the Euro by the end of the year so those selling Euros may want to take advantage of this spike.
The US Dollar weakened against both the Euro and Sterling. Unemployment data out in the US showed an decrease in Non – Farm Employees Payrolls by 125,000. Retail spending makes up 2/3 of all Us economic activity so this is watch closely. A reduction too in the number of Pending Home Sales by 30% also contributed to dollar weakness against the Euro. EURUSD is still at 1.25 so those with EURUSD requirements may want to take advantage.
The problems in the eurozone have been mainly the issue of sovereign debt. The problems still need to confronted. 23rd July marks the date of Stress Tests on European Banks. This will be very closely watched because it is the fear that the banks and governments may not be able to repay loans that has squeezed the market. Following the generally positive news last week, this may not now be as bad as anticipated and could mean the GBPEUR will not rise significantly again for sometime.
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